$8,000 Home Buyer Tax Credit at a Glance

• The tax credit is for first-time home buyers only.
• The tax credit does not have to be repaid.
• The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.
• The credit is available for homes purchased on or after January 1, 2009 and before December 1, 2009.
• Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.

Learn More at:

http://www.federalhousingtaxcredit.com/2009/home2.html

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Q&A: Explaining Myth Versus Reality About Today’s Housing Market

Q: Given the uncertainty in the financial markets and economy, is this a good time to buy?

A: The answer is simple: Yes. It’s a good time to buy. Today’s market, coupled with a generous temporary tax credit for first-time home buyers and near-record low mortgage interest rates, provides an unprecedented window of opportunity for prospective home buyers. An outstanding selection is another reason that it’s a great time to buy. Available inventory is probably the best it will ever be, providing buyers with a great choice of homes. Many builders have inventory that is “move-in ready,” and they may offer upgrades or other incentives to seal the deal. Likewise, owners of existing homes who are looking to trade-up or relocate are ready to bargain. Add it all up and there may never be another buyer’s market as good as today’s.


Q: There doesn’t seem to be an end in sight to the housing slump. By the time the market hits bottom, won’t housing be down and out for the count?

A: Without trying to minimize the problems we have today, it’s important to keep your eye on the big picture. Over the long-term, the U.S. is definitely on a growth path. Our population will rise by about 35 million over the next 10 years. All of those people will need someplace to live. Consider these facts: America currently has about 105 million occupied housing units. About 70 million of those are owner-occupied. The other 35 million are rental units. Total equity (value of homes minus any mortgage debt) amounts to $8.5 trillion. More than one-third of all home owners own their home outright, with no mortgage debt. And more than 90 percent of those who have mortgages are making their payments on time every month.

Home values will ultimately bottom out and start edging back up. Once we turn the corner on the housing downturn, the longer term outlook is very promising.
As a long-term investment, homeownership remains a solid investment for individual households, with a track record that can compete with any other purchase in terms of its real benefits. The home building industry will need to construct more than 17 million new homes in the next decade to keep up with expected new household formations.
All of this bodes well for future house price appreciation


Q: Does the government action to rescue Fannie Mae and Freddie Mac in September signal that the mortgage market is in a free fall? In other words, does the government takeover of these two mortgage finance giants mean that mortgage money has dried up?

A: The short answer to both questions is no. Quite the contrary, the federal takeover was initiated to avert any serious risk to the financial system and to keep money available for mortgages. It’s still business as usual for Fannie Mae and Freddie Mac. There is no credit crunch for qualified buyers taking out conventional loans. Remember, the housing law enacted this summer has permanently boosted the limit for these loans from $417,000 to $625,500. And this is where the bulk of all home loans are made. Credit-worthy home buyers should have no problems finding conventional, conforming mortgages at very attractive rates. In fact, today’s mortgage rates remain near historic lows, well below 6 percent for fixed-rate, 30-year loans.


Q: With the nation in a foreclosure crisis, why should I be looking for a new home?

A: While foreclosure rates have increased in the past year, the vast majority of American home owners are making their mortgage payments on time. More than 95 percent of prime borrowers – the bulk of the mortgage market – are up-to-date on their payments. Most foreclosures are concentrated in the once super-heated markets in California, Florida, Arizona and Nevada and the upper Midwest states of Michigan, Ohio, Minnesota and Illinois, which have been hit hard by job losses, plant closings and depressed local economies.

But again, we need to put this problem into perspective. As noted above, California and Florida are at the epicenter of this problem. California and Florida had about 54 percent and 41 percent of the prime and subprime ARM foreclosure starts in the third quarter of 2008, respectively, according to the latest foreclosure data from the Mortgage Bankers Association.

There’s no question that the foreclosure issue is a major problem that needs to be addressed. That is why we are encouraging lawmakers to include aggressive foreclosure relief measures in the economic stimulus package that the new Congress is expected to pass in January.

Q: In today’s housing environment, isn’t the smart move to keep waiting for prices to fall even further before venturing into the housing market?

A: The current housing price correction is helping to restore affordability. In many parts of the country where the housing boom was not as strong, price declines have been modest. The bottom line for most existing home owners is that their homes will be worth significantly more than they paid for them once the market begins to recover – a process that is expected to begin in 2009. The repercussion for prospective buyers is that the market has provided some breathing room from the sky-high prices prevailing between 2003 and 2006. And those who try to “time the market” in hopes of buying at the trough are likely to lose out. Here’s why. Just as no one can accurately predict the peaks and valleys of the stock market, the same holds true for housing. Fence-sitters waiting for the absolute best deal could end up literally waiting for years, and most likely their guess on market timing would be wrong. Meanwhile, those who buy now will have a home they can call their own and reap the long-term gains of home price appreciation.

Q: It seems that home prices will just keep going lower and never recover. What’s to stop this from happening?

A: It is a virtual given that over time home values will stabilize and then edge upward with the next recovery. To argue that home values will continue to decline and will never recover, somebody has to make a convincing argument that it will cost less to build a new home five years from now than it does today. That’s not going to happen.

Despite today’s housing slowdown, the price of most building materials used in home construction continue to go up due to worldwide demand and upward pressure on commodity prices generally. Also, over time labor costs are expected to rise. Look at anticipated population and household growth; consider the increasing scarcity of available land in metro markets where jobs are located and where people want to live. And the cost of getting land entitled will continue to go up because of more and more restrictions and fees being added by local governments. As inventories wind down, demand will rise and so will prices. Over time, all these factors will help drive up the cost of housing.


Q: The S&P/Case-Shiller monthly home price index showed that home prices declined an average of 17.4 percent in the nation’s 20 largest markets between September 2007 and September 2008. Does this mean that home prices in these markets -- and nationwide -- are in a major tailspin?

A: Different economic and job-market conditions directly affect demand for new and existing homes in every market Part of the problem is due to an influx of speculators in some large markets who helped drive prices up to unsustainable levels. For example, all the markets that posted the largest average decline in home prices during the past year – Las Vegas, Los Angeles, Miami, Phoenix, San Diego, San Francisco and Tampa – still have appreciated in value by at least 40 percent since January 2000, according to the latest S&P/Case-Shiller home price statistics. Four of these markets – San Diego, Tampa, Miami and Los Angeles – were up between 64 and 85 percent over this period.

It makes sense that the most super-heated housing markets in California, Nevada, Arizona and Florida are now experiencing the most serious market corrections. Areas in the Midwest are also undergoing price corrections due to stagnant economic conditions. For the rest of the country, however, the price adjustments have been relatively modest.
Though housing is a cyclical business, experience shows that over time, home prices will stabilize and then move upward with the next recovery.

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Time is of the essence

Consumers should be shouting off the rooftops about the fantastic deals they are being offered in both housing and mortgage rates. Mortgage rates have dropped to the lowest level since the 1970s. Housing prices are the lowest they have been in years, affordability is available and offered. So why are so many consumer waiting? I believe many consumers are waiting to see what will happen. They want the best deal possible so they are on the fence waiting for rates to drop even lower and home deals to get even better. But sadly they may be missing out on something that will not last much longer.

According to a recent poll done by local real estate industry professionals asking when they think the market will start to recover (meaning the sellers will once again get the upper hand) 25% said mid 2009, 25% said late 2009, and 37% said late 2010. If these predictions hold true we could see a shift in the next year towards stabilization of home prices and mortgage rates. This means that sellers will no longer give away the firestorm deals and incentives they have in the past 2 years and it is likely that with this stabilization the Fed will bring the interest rates back to a normal level we have seen in recent years rather then the under 6% range we see now.

So like any other investment there is risk and in a market like this the risk is much lower for buyers then it is for sellers. The deals are out there but many consumers might have noticed that less and less builders are giving away their homes and re-sale sellers are taking their homes off the market until the prices stabilize. The time is now; buy now or you might loose money later.

Buyers are seeing that there are a lot of great resale deals or perhaps hearing about all the quick sale/ foreclosures that are out there. Yes quick sales are up meaning that the amount of distressed properties are up. Many people are struggling to make their house payments because of all the crazy loans they were put into are now adjusting. This is both bad and good. The bad news is we never want to see this many people struggling with their payment, this is bad for both them, the banks, and the community. However President Obama has pledged that between $50billion and $100billion will be used to help boost efforts in combating the increasing mortgage foreclosures. The good thing is that an increase in Foreclosed sales and closes in the area means the inventory will soon be going down. The idea is the more inventories we wash out the more stable the market will be.

There is a pent up demand for homes out there and anytime now consumers will realize that now is not only the time to buy but the BEST time to buy. So as the title of this blog suggest, time is of the essence. Buy now or soon or else you could miss out or find yourself purchasing your home with a higher interest rate and a higher price.

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For more information or for additional testimonials please email me at knoble@campbellhomes.com

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Foreclosure Talking Points

Foreclosure Talking Points

• The Mortgage Bankers Association’s latest survey (http://www.mbaa.org/NewsandMedia/PressCenter/66626.htm) shows that the percentage of loans in the foreclosure process increased from 2.75 percent in the second quarter to a record 2.97 percent in the third quarter of 2008.

• The media is sensationalizing these numbers and conveying the false impression that foreclosures are running rampant in every community across the nation.

• Certainly there is no question that rising foreclosure rates are a serious problem.

• But a close examination of the facts shows that many of these reports are grossly exaggerated.

• It’s important to note that the vast majority of American home owners – 93 percent -- are making their mortgage payments on time.

• Breaking down prime and subprime loans, more than 95 percent of prime borrowers – the bulk of the mortgage market -- are up-to-date on their payments.

• The problem is in the subprime market. Nationally, about 20 percent of subprime borrowers are behind on their mortgage payments.

• But it’s also important to remember that 37 percent of all single-family homes are owned debt-free – without any mortgage – and that home owners nationwide have built up $8.5 trillion in equity that provides a good cushion against any decline in values.

• Furthermore, housing is not a national market. All housing markets are local.

• For example, the Mortgage Bankers Association’s data show that most foreclosures are concentrated in the once super-heated markets in two states: California and Florida.

• These two states combined (California 54 percent and Florida 41 percent) have about 95 percent of all prime and subprime ARM foreclosure starts, respectively.

• And remember, prime and subprime ARMs comprise the highest share of loan foreclosures.


• Foreclosure actions began on 1.07 percent of all home loans in the third quarter, down one basis point from the previous quarter. Only nine states were above the national average: Nevada, Florida, Arizona, California, Michigan, Rhode Island, Illinois, Indiana and Ohio.

• The remaining 41 states plus the District of Columbia were below the national average.

• Still, the foreclosure problem is a major issue that needs to be addressed.

• The best way to do this is to halt the slide in home prices.

• The solution is to stimulate demand. Congress should make the recently implemented home buyer tax credit much bigger and better, and available to all purchasers.

• At the same time, it should enact a sizeable government buy down of home mortgage rates.

• Together these measures would ignite buyer demand, which would help stabilize home values, reduce foreclosures and get the housing market and economy back on the right track.

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